Piston market stabilizes while turbines recede
After a harrowing plunge, the market for piston singles and twins stabilized in the second quarter of 2010 while prices for turboprops and jets continued to trend downward.
Vref, the authoritative source for aircraft valuation and provider of AOPA’s Online Aircraft Valuation Service, delivered those conclusions in its most recent quarterly newsletter and attributed the precipitous drop in the turbine market to some of the same factors as the housing crunch—loose credit that led to rampant speculation and an unsustainable surge in prices.
“Easy money flowed into the airplane market,” the Vref report said. “It seemed that almost anyone could have a big house and an airplane to go with it. By the time 2007 rolled around, the large jet market was white hot.”
The following year, however, the “granddaddy of all bubbles blew apart,” and multi-billion-dollar jet order backlogs evaporated in an unprecedented series of cancellations. Values for existing jets went off a cliff, too, with a 1991 Beechjet, for example, dropping 51 percent, a 2000 Falcon 50EX falling 46 percent, and a 2000 Gulfstream IVSP-30 tumbling 53 percent.
Used turboprops fell, too, although less dramatically. A 1985 King Air C90 lost 27 percent of its value, and a 1980 Cheyenne II dropped 24 percent.
Barring future calamities, Vref expects aircraft demand and values to “slowly improve for late model, no negative airplanes of all sizes. However, some segments—older, out-of-production, hopelessly outdated airplanes—are bloated and may never recover.” Lending constraints also are likely to keep a lid on the market for older jets and turboprops.
Older Beech Bonanzas, Cessna 210s, Mooney 201s, and Piper Cherokee 180s and Arrows, however, are likely to appreciate because they’re relatively inexpensive to own and operate, Vref said. Widespread economic fear is restraining the aircraft market now, despite a recovery in other areas of the economy.
“Commerce is happening, just not fast enough to trickle up to aviation—yet.”
September 15, 2010